As a key component of LED products, the main function of LED chips is to convert electrical energy into light energy and it directly affect the quality and performance of LED products. In terms of demand, according to the observation of LEDinside, the Optoelectronics Research Division of TrendForce, With the consistently development of the LED industry, Lighting is still has the greatest demand for chips in the application market.but this situation is gradually changing. With the increasingly fierce competition in the low-end lighting market,some high-technology manufacturers have begun to reduce low-end lighting production capacity and turned into the high-end market.

Mini/Micro LED: a new niche market for LED chip companies

In the past few years, LED chips have been ups and downs, and the industry structure has undergone major changes.

In 2016, LED lighting applications continued to penetrate, the small-pitch market gradually exploded, and the chip supply is far from meeting the market demand, and many active manufacturers began to expand production capacity plans.

In 2017, the LED industry is in an upswing period and chip factories are also expanding production wildly under strong demand

In 2018, the backlash brought by irrational expansion finally appeared. The LED chip production capacity was released in a concentrated manner, the price dropped due to the abundant supply.

In 2019, due to trade frictions, the substantial economy is sluggish, terminal market demand has fallen sharply, and the LED chip industry is facing many difficulties.

In the first half of 2020, the epidemic further restrained downstream demand, which was already at a low level. Coupled with the continued trade frictions, the chip industry became more and more in dire straits.

From crazy expansion to survival of the fittest, LED chip companies have further increased the industry concentration after this round of consolidation, and the oligopoly effect has gradually become clear.

However, becoming an "oligarch" does not mean that you can sit back and relax from now on. Due to the traditional overcapacity, the downward pressure on chip prices is high, and profit margins are squeezed. Under the pressure of survival, companies with technical strength have turned their attention to new niche markets, and Mini/Micro LED is one of the key directions.

Mini/Micro LEDs are the outcome products of small-pitch LEDs, with superior performance in ultra-high-definition, ultra-thin, flexible and other aspects. It has become a major investment hotspot in the LED industry in recent years and is a strong competitor of future display technology.

Under this trend, the market demand for Mini/Micro LED chips is also rising.

It is worth mentioning that the chips demand for Mini/Micro LED display technology is much more than traditional backlight solutions in the past. Take Mini backlight as an example. The traditional backlight solution uses a small number of LED chips and is calculated in ten-level units; while the number of chips used in MiniLED backlights is calculated in 10,000-level or even 100,000-level units.

This also means that in the field of MiniLED, although the chip size is reduced, the usage is a hundredfold growth. As the display penetration rate of MiniLED backlights increases, the demand for GaN-LED epitaxial wafers for MiniLED backlights will also grow rapidly. LEDinside, the Optoelectronics Research Division of TrendForce, pointed out that by 2025, the demand for LED epitaxial wafers brought by the new Mini/Micro LED displays will reach 14.17 million pieces per year.

"Chip" matters: capacity, technology, future planning

Mini/Micro LED is opening a new growth era in the LED chip industry.

However, for now, although Mini/Micro LED chip production capacity is being released at an accelerated pace, it still cannot meet market demand.

1）Capacity

The high enthusiasm of enterprises has brought the gradual release of Mini/Micro LED chip production capacity.

Sanan’s Mini/Micro LED production capacity in Xiamen and Quanzhou is gradually releasing, and Hubei San’an’s Mini/Micro LED epitaxy and chip industrialization project with an investment of 12 billion RMB will also be put into production as scheduled at the end of March.

HC Semitek's Mini LED chips have achieved large-scale production and shipment in 2019, and the products have been recognized by international mainstream display players.

Zhaochi recently stated in a research report that the current LED chip sales are progressing well, and they are in a state of full production and sales.

Shunchang Optoelectronics focuses on consumer electronics applications as its main target market and launches MiniLED backlight chip solutions. Its current monthly production capacity is 5-10K 4-inch wafers. At the same time, some of their projects have entered the final reliability test stage, and mass production is expected to be achieved by the end Q2, 2021.

In terms of Silanic, in 2020, the company's subsidiary Silan Mingxin accelerated the research and development and customer expansion of flip-chip MiniLED chips for high-density (COB) color screens and MiniLED backlight chips for smart area dimming of LCD screens. In Q4 of 2020, Silan Mingxin's monthly output of LED chips (4-inch chips) increased to 60,000, and achieved full production and sales.

China Yinxin can meet the supply of its own 100K Pcs Mini backlight products in the production of MiniLED chips.

Focus Lighting stated in the Investor Relations Activity Record Form a few days ago that the company currently has the relevant technology layout on Mini chips, but due to insufficient production capacity, it is currently unable to supply large quantities to downstream customers.

2）Technology 

As a technology with a very high threshold, Mini/Micro LED chips still have many technical problems.

Leimeng Sun, Chairman of China Yinxin, told LEDinside that at present, various companies have different routes to MiniLED. China Yinxin has reached the mass production level in terms of equipment speed and yield, but it still needs to solve the vertical matching problem of the entire production line. .

He also said that in the technological path: substrate technology, Pick & Place and mass transfer have their own advantages, but at this stage, for MiniLED, Pick & Place is more mature, and the follow-up will be the development of substrate technology and mass transfer.

Coincidentally, Shunchang Optoelectronics also stated that the key to the success of MiniLED products is the production speed and yield rate of the chip transferred to the substrate. There are a variety of chip transfer technology solutions and some of them need to be jointly developed/cooperated by chip manufacturers. To improve the pass-through rate, it is necessary to link the chip solution, the accuracy of the substrate and the accuracy of the equipment to match the optimal solution.

On the technical path, Shunchang Optoelectronics believes that the traditional Pick & Place + COB (BT&FPCB) will be the fastest technology to achieve mass production and will become the mainstream solution in the short to medium term.

In addition, the realization of massive transfer + COG requires the cooperation of chip manufacturers. Due to the high technical difficulty of this technology, only a few large-scale system factories can realize the cooperation. In the short and medium term, the solution still needs to solve problems such as thrust. In the long term running, the solution has cost advantages and will be a mainstream solution for large-size applications.

3) Future planning 

Technical difficulties have lengthened the R&D cycle, and Mini/Micro LED chips is still in short supply status. In order to alleviate this situation, companies have launched expansion plans.

HC Semitek completed a fixed increase of 1.5 billion RMB in the second half of 2020 in which 1.2 billion RMB was invested in Mini/Micro LED R&D and manufacturing projects, and 300 million RMB was invested in GaN-based power electronic device R&D and manufacturing projects.

Focus Lighting released the "Prospectus for Issuing Shares to Specific Objects (Registration Draft)" in October 2020. According to the announcement, Focus Lighting plans to raise 1 billion RMB, including a total investment of 949 million RMB in the expansion and upgrading project of high luminous efficiency LED chips and 700 million RMB of raised funds.

Qianzhao Optoelectronics launched a 1.5 billion RMB fixed increase plan on November 18, 2020. Among them, Mini/Micro, high-efficiency LED chip research and development and manufacturing projects plan to raise 1.15 billion RMB. After the fund-raising project is completed, a total of 6.36 million pieces of MiniLED BLU, MiniLED GB, Micro LED chips, and high-efficiency LED chip production capacity will be realized annually.

China Yinxin has also started the expansion of a new phase of MiniLED production line, which is expected to be put into operation in Q4 2021 when the production capacity will reach 5-10 times the output expansion.

Shunchang Optoelectronics believes that MiniLED backlights are mainly used in consumer electronics, TVs, and automobiles. MiniLED direct displays are mainly for commercial displays and there is still a long way to go from consumer applications. At present, the company has expanded the production of MiniLED backlight products in an orderly manner. In the next three to five years, MiniLED backlight products are expected to become the main product of Shunchang Optoelectronics.

It can be seen that as more and more mass-produced products appear on the market, the supply pressure of Mini/Micro LED chips will gradually decrease, the shortage of supply will be quickly alleviated, and Mini/Micro LED will also enter a rapid development cycle. 

Conclusion

At present, both upstream and downstream manufacturers in the Mini/Micro LED market have taken action. Terminal products have been realized mass production and various innovative products have been continuously launched. TV manufacturers such as Sony, Samsung, and TCL, and mobile phone manufacturers such as Apple, Huawei, and Xiaomi have all set foot in the Mini/Micro LED field.

In the past 10 years, lighting is the main demand for LED industry and in the next 10 years, the display will be the main driving force supporting the continued development of the LED industry. With the further release of terminal demand and the gradual resolution of technical problems, the utilization rate of LED chip manufacturers has gradually picked up, and with the commercialization of Mini/Micro LED displays, the demand for LED chips will increase significantly, which will further promote the LED industry Overall demand. (Text: LEDinside Lynn)